Personal Impressions: NY Seed Investing

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I got a deck from a company the other day. We were excited about this one, as it was recommended by an angel we work with often. As we finished going through the deck (which was actually nicely designed), one question remained etched in our minds – “what does this company actually do?? With this deck specifically I think a team of linguistic specialists, hieroglyphic experts and NASA scientists couldn’t figure it out.

There are many things that are happening in NYC- the fastest growing venture hub in the world (new found business models, combination of industry and venture, online/offline phenomena and more) – but if I had to pinpoint the place where most Israeli startups have difficulty with, it is “the pitch”- that first meeting with a prospective investor. Sometimes you don’t have to invent the wheel. In my humble opinion, if you stick with this simple recipe (“10 steps – big bux” I call it), and don’t bootstrap on design – you should do great!

“The Elevator pitch” – It should be one slide, probably no more than 140 characters. If you cannot convey the essence of your business in those constraints, might as well not come in that day. Oh, and this is probably your first slide, try to add something that gets that boring VC a smile on his face – a photo/quote – whatever gets the job done.

The problem: People relate to problems they understand. If your business is in the consumer space – you lucked out, and it should be super easy to make your problem clear, even hurt. Test yourself. Try to pose it as a question and see if it works. “Have you ever been kicked in the nuts?” Ouch, I get it, please show me the solution. If you got yourself into a more technological or B2B Company, the “problem” can be harder to describe. Try and override this by bringing a credible source on board. Por ejemplo: “87% of companies have experienced server crashes in the last year alone – Forbes.”

Your solution – it should end up explaining why your company is 3 B’s – Bigger, Badder and ‘Bout making your customers happy (and always explain how well you know your customers). This is where you should pop out that demo / screen shots.

Market size– Explain your market size both top down and bottom up.

Business model. It should be pretty simple. Just jot down one word revenue stream descriptions – “Licenses”, “Advertising”, “Affiliate fees”, “Lead-gen” – and prioritize them. Also mention what building blocks the company needs in order to get that cash.

Marketing. I’ll surprise you. This is where most start-ups fail in their pitch. Today, product is only half the battle, and distribution / customer acquisition are just as important. Here, as opposed to the business model, do not use one word bombs. “Word of mouth”, “Direct marketing”, “strategic partnerships” – out. Specific planned campaigns, estimated user cost of acquisition and timelines – in.

Competition – List all of them, categorize them, and make sure you respect them. Forget what you actually think about each and every player in your competitive landscape; make sure you know them better than anyone else in the room. Here you should also probably randomly / surprisingly pull out the competitors’ screen shots in another deck. Genuinely and humbly be able to explain why you can be bigger/ successful in your niche

The team – This should be a fun slide, focusing on core competency. If you are an inexperienced team, don’t try and hide it. It’s better to be inexperienced with one or two experienced people on the board / advisors than listing all available 8200 awards received during your distinguished military service.

The so what slide: What are you raising? What are you raising it for? What milestones will you reach?

The forever-changing slide: There are two questions to which the answers should change on a presentation to presentation basis. Who is on- board already? (And there should always be at least “a small group of angels” committed so that you can show momentum) And, why is this specific investor special? Every investor should feel like he can bring real added value to an investment he makes – if you actually put it in your deck before you come into the meeting, the potential investor might actually believe it

I know, a lot of this is stating obvious, but sometimes wrapping it all up so that it is “short and sweet” (hopefully), can be helpful.